March 2019

Biogas opportunities for Australia

Biogas opportunities for Australia

Biogas is a renewable, reliable and local energy source. The biogas industry provides an alternative route for waste treatment while contributing to the development of local economies.

Blunomy (Enea Consulting) was commissioned by Bioenergy Australia to prepare this public report, which examines the benefits of biogas and the hurdles currently faced by the industry in Australia. The report also includes recommendations to advance Australia’s biogas sector.

This report was made possible by the support and partnership of Australian Renewable Energy Agency, Clean Energy Finance Corporation, Energy Networks Australia and International Energy Agency’s Bioenergy Task 37.

In Australia, the biogas industry is emerging with the electricity generation from biogas contributing to about 0.5 per cent of the national electricity generation.

  • In 2017, out of the 242 biogas sites in the country, half were landfills collecting landfill gas. Roughly half of this landfill gas was not used as an energy source and was flared. The biogas resources in Australia have the potential to supply up to 9 per cent of Australia’s total final energy consumption or more than one-third of the country’s natural gas consumption in 2016-2017.

The investment opportunity for new bioenergy including biogas projects is estimated at $A3.5 to 5.0 billion. Biogas also has the potential to avoid up to 9 million tonnes of CO2e emissions each year. Global biogas production is about 1.5 per cent of the global renewable energy supply. It is driven by leading countries, such as Germany, the United Kingdom, the United States and China.

  • The biogas sector development is driven by different objectives. This includes addressing landfill issues in the United Kingdom, supporting renewable energy in California, improving energy access in China or supporting the agriculture sector in France. Significantly, policy support such as renewable energy targets and feed-in tariffs have been catalysts to drive the sector’s growth in various countries.

Biogas and its industry offer many benefits:

  • Biogas is a renewable, continuous and dispatchable energy source that can contribute to national energy supply, support grid reliability, and assist the decarbonisation of the economy.
  • Biogas also provides a way of producing energy from waste. For example, landfill gas can be utilised for energy instead of being flared.
  • The biogas industry supports local economies and regional communities, creating jobs and offering new income sources, particularly for farmers.
  • As a renewable natural gas, biomethane can replace natural gas by being injected into the existing gas grid. Hence, it can provide cleaner energy to large industries, businesses and households, as well as fuel for vehicles.

Despite its benefits, the Australian industry faces challenges that are hindering its development. These challenges include:

  • Financial viability of projects: the high upfront investment and the complexity of securing revenue sources for a project can be barriers. Nonetheless, smaller projects designed for on-site consumption can demonstrate better financial viability.
  • Policy challenges and gaps: although some support mechanisms are available, more favourable policy conditions could increase the uptake of projects.
  • Project development: obstacles are faced in developing and operating biogas plants, including securing feedstock and revenue sources, going through various approval processes and accessing private funding.

Key recommendations to advance Australia’s biogas sector are below. The full list of recommendations is in the report.

  • Setting renewable gas target(s) : The Commonwealth and State Governments could set renewable gas targets to stimulate biogas production and consumption.
  • Launching industry consultation for policy design : The Commonwealth and State Governments could launch a detailed industry consultation on how existing policies could be adapted and how new ones could be designed to support the sector. This is aimed to deliver more harmonised and uniform national and state policies to provide greater policy direction.
  • Introducing waste strategies to support feedstock quality and quantity : State Governments could work together to introduce more harmonised waste levies to avoid perverse outcomes, whereby waste is sent to states with lower levies.
  • Exploring transport sector opportunities : The Commonwealth Government could explore greater support mechanisms to promote the use of biomethane in the transport sector. This can encourage the transport sector’s decarbonisation.
  • Simplifying approval processes : Governments, project proponents, local authorities and electricity and gas network businesses should work together to address the complex and very long approval processes.
  • Informing the community about biogas and its benefits : Government and industry stakeholders could continue to inform the community about biogas and the opportunities it represents for the Australian energy transition and society.